Half Year Results (Part 2 of 2)
Kingfisher plc
2023/24 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED INCOME STATEMENT
|
|
|
|
|
|||||
|
|
|
Half year ended 31 July 2023 |
Half year ended 31 July 2022 |
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|
£ millions |
Notes |
Before adjusting items |
Adjusting items (note 5) |
Total |
Before adjusting items |
Adjusting items (note 5) |
Total |
|
|
Sales |
4 |
6,880 |
- |
6,880 |
6,809 |
- |
6,809 |
|
|
Cost of sales |
|
(4,385) |
- |
(4,385) |
(4,313) |
- |
(4,313) |
|
|
Gross profit |
|
2,495 |
- |
2,495 |
2,496 |
- |
2,496 |
|
|
Selling and distribution expenses |
|
(1,605) |
(21) |
(1,626) |
(1,549) |
1 |
(1,548) |
|
|
Administrative expenses |
|
(511) |
- |
(511) |
(434) |
- |
(434) |
|
|
Other income |
|
12 |
2 |
14 |
11 |
1 |
12 |
|
|
Share of post-tax results of joint ventures and associates |
|
(5) |
- |
(5) |
5 |
- |
5 |
|
|
Operating profit |
4 |
386 |
(19) |
367 |
529 |
2 |
531 |
|
|
Finance costs |
|
(64) |
- |
(64) |
(65) |
- |
(65) |
|
|
Finance income |
|
14 |
- |
14 |
8 |
- |
8 |
|
|
Net finance costs |
6 |
(50) |
- |
(50) |
(57) |
- |
(57) |
|
|
Profit before taxation |
|
336 |
(19) |
317 |
472 |
2 |
474 |
|
|
Income tax expense |
7 |
(87) |
7 |
(80) |
(104) |
3 |
(101) |
|
|
Profit for the period |
|
249 |
(12) |
237 |
368 |
5 |
373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
8 |
|
|
|
|
|
|
|
|
Basic |
|
|
|
12.4p |
|
|
18.6p |
|
|
Diluted |
|
|
|
12.2p |
|
|
18.3p |
|
|
Adjusted basic |
|
|
|
13.0p |
|
|
18.3p |
|
|
Adjusted diluted |
|
|
|
12.8p |
|
|
18.0p |
|
|
|
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The proposed interim ordinary dividend for the period ended 31 July 2023 is 3.80p per share (2022/23: 3.80p per share).
Kingfisher plc
2023/24 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED INCOME STATEMENT
|
|
|
Year ended 31 January 2023 |
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|
£ millions |
Notes |
Before adjusting items |
Adjusting items (note 5) |
Total |
|
Sales |
4 |
13,059 |
- |
13,059 |
|
Cost of sales |
|
(8,264) |
- |
(8,264) |
|
Gross profit |
|
4,795 |
- |
4,795 |
|
Selling and distribution expenses |
|
(3,087) |
(136) |
(3,223) |
|
Administrative expenses |
|
(868) |
(12) |
(880) |
|
Other income |
|
25 |
1 |
26 |
|
Share of post-tax results of joint ventures and associates |
5 |
- |
5 |
|
|
Operating profit |
4 |
870 |
(147) |
723 |
|
Finance costs |
|
(129) |
- |
(129) |
|
Finance income |
|
17 |
- |
17 |
|
Net finance costs |
6 |
(112) |
- |
(112) |
|
Profit before taxation |
|
758 |
(147) |
611 |
|
Income tax expense |
7 |
(169) |
29 |
(140) |
|
Profit for the year |
|
589 |
(118) |
471 |
|
|
|
|
|
|
|
Earnings per share |
8 |
|
|
|
|
Basic |
|
|
|
23.8p |
|
Diluted |
|
|
|
23.5p |
|
Adjusted basic |
|
|
|
29.7p |
|
Adjusted diluted |
|
|
|
29.4p |
|
|
|
|
|
|
Kingfisher plc
2023/24 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
|
£ millions |
Notes |
Half year ended 31 July 2023 |
Half year ended 31 July 2022 |
Year ended 31 January 2023 |
|
Profit for the period |
|
237 |
373 |
471 |
|
Remeasurements of post-employment benefits |
11 |
(9) |
(14) |
(278) |
|
Inventory cash flow hedges - fair value (losses)/gains |
|
(40) |
113 |
58 |
|
Tax on items that will not be reclassified |
|
14 |
(24) |
85 |
|
Total items that will not be reclassified subsequently to profit or loss |
|
(35) |
75 |
(135) |
|
Currency translation differences |
|
|
|
|
|
Group |
|
(10) |
(22) |
129 |
|
Joint ventures and associates |
|
(4) |
(1) |
11 |
|
Transferred to income statement |
|
(2) |
- |
- |
|
Inventory cash flow hedges - losses/(gains) transferred to income statement |
|
9 |
- |
(5) |
|
Total items that may be reclassified subsequently to profit or loss |
|
(7) |
(23) |
135 |
|
Other comprehensive (expense)/income for the period |
|
(42) |
52 |
- |
|
Total comprehensive income for the period |
|
195 |
425 |
471 |
Kingfisher plc
2023/24 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
|
|
|
|
Half year ended 31 July 2023 |
|
||||
|
£ millions |
Share capital (note 13) |
Share premium |
Own shares held |
Retained earnings |
Capital redemption reserve |
Other reserves (note 14) |
Total equity |
|
||
|
At 1 February 2023 |
305 |
2,228 |
(22) |
3,796 |
71 |
285 |
6,663 |
|||
|
Profit for the period |
- |
- |
- |
237 |
- |
- |
237 |
|||
|
Other comprehensive expense for the period |
- |
- |
- |
(4) |
- |
(38) |
(42) |
|||
|
Total comprehensive income/(expense) for the period |
- |
- |
- |
233 |
- |
(38) |
195 |
|||
|
Inventory cash flow hedges - losses transferred to inventories |
- |
- |
- |
- |
- |
12 |
12 |
|||
|
Share-based compensation |
- |
- |
- |
12 |
- |
- |
12 |
|||
|
New shares issued under share schemes |
- |
- |
- |
2 |
- |
- |
2 |
|||
|
Own shares issued under share schemes |
- |
- |
9 |
(9) |
- |
- |
- |
|||
|
Purchase of own shares for cancellation |
(6) |
- |
- |
(103) |
6 |
- |
(103) |
|||
|
Purchase of own shares for ESOP trust |
- |
- |
(24) |
- |
- |
- |
(24) |
|||
|
Dividends |
- |
- |
- |
(165) |
- |
- |
(165) |
|||
|
Tax on equity items |
- |
- |
- |
- |
- |
(4) |
(4) |
|||
|
At 31 July 2023 |
299 |
2,228 |
(37) |
3,766 |
77 |
255 |
6,588 |
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
Half year ended 31 July 2022 |
|
|||||||
|
£ millions |
Share capital (note 13) |
Share premium |
Own shares held |
Retained earnings |
Capital redemption reserve |
Other reserves (note 14) |
Total equity |
|
||
|
At 1 February 2022 |
325 |
2,228 |
(46) |
4,025 |
50 |
196 |
6,778 |
|||
|
Profit for the period |
- |
- |
- |
373 |
- |
- |
373 |
|||
|
Other comprehensive (expense)/income for the period |
- |
- |
- |
(10) |
- |
62 |
52 |
|||
|
Total comprehensive income for the period |
- |
- |
- |
363 |
- |
62 |
425 |
|||
|
Inventory cash flow hedges - gains transferred to inventories |
- |
- |
- |
- |
- |
(61) |
(61) |
|||
|
Share-based compensation |
- |
- |
- |
11 |
- |
- |
11 |
|||
|
New shares issued under share schemes |
- |
- |
- |
2 |
- |
- |
2 |
|||
|
Own shares issued under share schemes |
- |
- |
17 |
(17) |
- |
- |
- |
|||
|
Purchase of own shares for cancellation |
(13) |
- |
- |
(225) |
13 |
- |
(225) |
|||
|
Dividends |
- |
- |
- |
(172) |
- |
- |
(172) |
|||
|
Tax on equity items |
- |
- |
- |
(1) |
- |
14 |
13 |
|||
|
At 31 July 2022 |
312 |
2,228 |
(29) |
3,986 |
63 |
211 |
6,771 |
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
Year ended 31 January 2023 |
||||||||
|
£ millions |
Share capital (note 13) |
Share premium |
Own shares held |
Retained earnings |
Capital redemption reserve |
Other reserves (note 14) |
Total equity |
|||
|
At 1 February 2022 |
325 |
2,228 |
(46) |
4,025 |
50 |
196 |
6,778 |
|||
|
Profit for the year |
- |
- |
- |
471 |
- |
- |
471 |
|||
|
Other comprehensive (expense)/income for the year |
- |
- |
- |
(181) |
- |
181 |
- |
|||
|
Total comprehensive income/(expense) for the year |
- |
- |
- |
290 |
- |
181 |
471 |
|||
|
Inventory cash flow hedges - gains transferred to inventories |
- |
- |
- |
- |
- |
(117) |
(117) |
|||
|
Share-based compensation |
- |
- |
- |
19 |
- |
- |
19 |
|||
|
New shares issued under share schemes |
1 |
- |
- |
7 |
- |
- |
8 |
|||
|
Own shares issued under share schemes |
- |
- |
24 |
(24) |
- |
- |
- |
|||
|
Purchase of own shares for cancellation |
(21) |
- |
- |
(275) |
21 |
- |
(275) |
|||
|
Dividends |
- |
- |
- |
(246) |
- |
- |
(246) |
|||
|
Tax on equity items |
- |
- |
- |
- |
- |
25 |
25 |
|||
|
At 31 January 2023 |
305 |
2,228 |
(22) |
3,796 |
71 |
285 |
6,663 |
|||
Kingfisher plc
2023/24 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED BALANCE SHEET
|
£ millions |
Notes |
At 31 July 2023 |
At 31 July 2022 |
At 31 January 2023 |
|||
|
Non-current assets |
|
|
|
|
|||
|
Goodwill |
|
2,407 |
2,424 |
2,408 |
|||
|
Other intangible assets |
10 |
372 |
353 |
371 |
|||
|
Property, plant and equipment |
10 |
3,168 |
3,086 |
3,205 |
|||
|
Investment property |
10 |
28 |
33 |
30 |
|||
|
Right-of-use assets |
|
1,934 |
1,842 |
1,947 |
|||
|
Investments in joint ventures and associates |
|
12 |
20 |
30 |
|||
|
Post-employment benefits |
11 |
243 |
542 |
251 |
|||
|
Deferred tax assets |
|
19 |
9 |
16 |
|||
|
Other tax authority asset |
17 |
67 |
64 |
64 |
|||
|
Derivative assets |
12 |
- |
2 |
- |
|||
|
Other receivables |
|
16 |
17 |
19 |
|||
|
|
|
8,266 |
8,392 |
8,341 |
|||
|
Current assets |
|
|
|
|
|||
|
Inventories |
|
3,132 |
3,138 |
3,070 |
|||
|
Trade and other receivables |
|
393 |
364 |
347 |
|||
|
Derivative assets |
12 |
4 |
82 |
16 |
|||
|
Current tax assets |
|
44 |
37 |
40 |
|||
|
Cash and cash equivalents |
|
344 |
496 |
286 |
|||
|
Assets held for sale |
|
3 |
5 |
3 |
|||
|
|
|
3,920 |
4,122 |
3,762 |
|||
|
Total assets |
|
12,186 |
12,514 |
12,103 |
|||
|
|
|
|
|
|
|||
|
Current liabilities |
|
|
|
|
|||
|
Trade and other payables |
|
(2,665) |
(2,891) |
(2,483) |
|||
|
Borrowings |
12 |
(28) |
(17) |
(16) |
|||
|
Lease liabilities |
|
(350) |
(334) |
(343) |
|||
|
Derivative liabilities |
12 |
(54) |
(13) |
(47) |
|||
|
Current tax liabilities |
|
(2) |
(19) |
- |
|||
|
Provisions |
|
(9) |
(16) |
(10) |
|||
|
|
|
(3,108) |
(3,290) |
(2,899) |
|||
|
Non-current liabilities |
|
|
|
|
|||
|
Other payables |
|
(4) |
(10) |
(4) |
|||
|
Borrowings |
12 |
(101) |
(1) |
(102) |
|||
|
Lease liabilities |
|
(2,048) |
(1,984) |
(2,101) |
|||
|
Derivative liabilities |
12 |
(3) |
- |
(5) |
|||
|
Deferred tax liabilities |
|
(207) |
(310) |
(205) |
|||
|
Provisions |
|
(11) |
(12) |
(10) |
|||
|
Post-employment benefits |
11 |
(116) |
(136) |
(114) |
|||
|
|
|
(2,490) |
(2,453) |
(2,541) |
|||
|
Total liabilities |
|
(5,598) |
(5,743) |
(5,440) |
|||
|
Net assets |
|
6,588 |
6,771 |
6,663 |
|||
|
|
|
|
|
|
|
||
|
Equity |
|
|
|
|
|
||
|
Share capital |
13 |
299 |
312 |
305 |
|||
|
Share premium |
|
2,228 |
2,228 |
2,228 |
|||
|
Own shares held in ESOP trust |
|
(37) |
(29) |
(22) |
|||
|
Retained earnings |
|
3,766 |
3,986 |
3,796 |
|||
|
Capital redemption reserve |
|
77 |
63 |
71 |
|||
|
Other reserves |
14 |
255 |
211 |
285 |
|||
|
Total equity |
|
6,588 |
6,771 |
6,663 |
|||
The interim financial report was approved by the Board of Directors on 18 September 2023 and signed on its behalf by:
|
Thierry Garnier, Chief Executive Officer |
Bernard Bot, Chief Financial Officer |
|
|
|
Kingfisher plc
2023/24 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED CASH FLOW STATEMENT
|
£ millions |
Notes |
Half year ended 31 July 2023 |
Half year ended 31 July 2022 |
Year ended 31 January 2023 |
|
Operating activities |
|
|
|
|
|
Cash generated by operations |
15 |
796 |
584 |
984 |
|
Income tax paid |
|
(68) |
(75) |
(130) |
|
French tax authority payment |
|
- |
(34) |
(34) |
|
Net cash flows from operating activities |
|
728 |
475 |
820 |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Purchase of property, plant and equipment and intangible assets |
|
(164) |
(184) |
(449) |
|
Disposal of property, plant and equipment, assets held for sale and intangible assets |
|
- |
1 |
2 |
|
Purchase of businesses |
|
(3) |
- |
- |
|
Disposal of subsidiaries and associates |
|
9 |
- |
8 |
|
Interest received |
|
7 |
1 |
5 |
|
Interest element of lease rental receipts |
|
- |
1 |
1 |
|
Principal element of lease rental receipts |
|
1 |
2 |
3 |
|
Advance payments on right-of-use assets |
|
(1) |
(2) |
(7) |
|
Advance receipts on right-of-use assets |
|
- |
2 |
2 |
|
Dividends received from joint ventures and associates |
|
- |
1 |
3 |
|
Net cash flows used in investing activities |
|
(151) |
(178) |
(432) |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Interest paid |
|
(2) |
(3) |
(5) |
|
Interest element of lease rental payments |
|
(62) |
(62) |
(124) |
|
Principal element of lease rental payments |
|
(176) |
(164) |
(329) |
|
Issue of fixed term debt |
|
- |
- |
99 |
|
New shares issued under share schemes |
|
2 |
2 |
8 |
|
Purchase of own shares for cancellation |
|
(99) |
(218) |
(337) |
|
Purchase of own shares for ESOP trust |
|
(24) |
(9) |
(9) |
|
Ordinary dividends paid to equity shareholders of the Company |
9 |
(165) |
(172) |
(246) |
|
Net cash flows used in financing activities |
|
(526) |
(626) |
(943) |
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents and bank overdrafts |
|
51 |
(329) |
(555) |
|
Cash and cash equivalents and bank overdrafts at beginning of period |
|
270 |
809 |
809 |
|
Exchange differences |
|
(4) |
(1) |
16 |
|
Cash and cash equivalents and bank overdrafts at end of period |
|
317 |
479 |
270 |
Kingfisher plc
2023/24 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Kingfisher plc ('the Company'), its subsidiaries, joint ventures and associates (together 'the Group') supply home improvement products and services through a network of retail stores and other channels, located mainly in the United Kingdom and continental Europe.
The Company is incorporated in England and Wales, United Kingdom, and is listed on the London Stock Exchange. The address of its registered office is One Paddington Square, London, W2 1GG.
The interim financial report does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Audited statutory accounts for the year ended 31 January 2023 were approved by the Board of Directors on 20 March 2023 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under sections 498(2) or (3) of the Companies Act 2006. The interim financial report has been reviewed, not audited, and was approved by the Board of Directors on 18 September 2023.
2. Basis of preparation
The interim financial report for the six months ended 31 July 2023 ('the half year') has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim Financial Reporting', as adopted by the United Kingdom. It should be read in conjunction with the annual financial statements for the year ended 31 January 2023, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRS Standards) as issued by the IASB. The consolidated income statement and related notes represent results for continuing operations, there being no discontinued operations in the periods presented. Where comparatives are given, '2022/23' refers to the six months ended 31 July 2022.
Going concern
Based on the Group's liquidity position and cash flow projections, including a forward-looking remote downside scenario, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, a period not less than 12 months from the date of this report, and they continue to adopt the going concern basis of accounting in preparing the condensed consolidated financial statements for the period ended 31 July 2023.
Considering whether the Group's condensed consolidated financial statements can be prepared on a going concern basis, the Directors have reviewed the Group's business activities together with factors likely to affect its performance, financial position and access to liquidity (including consideration of financial covenants). As of 31 July 2023, the Group had access to over £800m in total liquidity, including cash and cash equivalents of £317m (net of bank overdrafts) and access to a £550m revolving credit facility (RCF), of which £504m is due to expire in May 2026 and £46m in May 2025.
In forming their outlook on the future financial performance, the Directors considered the risk of higher business volatility and the potential negative impact of the general economic environment on household and trade spend.
The Directors' review also included consideration of a remote scenario that models the impact of a significant demand or supply shock preventing the Group from realising a large part of its sales over the period of a month followed by subdued demand for the following 11 months. The total loss of sales in this scenario is c.£1.4bn (10% over the impacted period). The scenario assumes the impact of lost sales is partially offset by a limited set of mitigating actions on variable and discretionary costs, capital expenditure and the suspension of capital returns to shareholders. Even under this remote scenario, which requires drawing on the RCF for a few months, the Group retains sufficient liquidity and remains in compliance with financial covenants on credit facilities. Should a more extreme scenario occur than currently forecast by the Directors under this remote scenario, the Group would need to implement additional operational or financial measures.
New and amended accounting standards
New standards, amendments and interpretations are in issue and effective for the Group's financial year ended 31 January
2024, but they do not have a material impact on the interim financial report.
Principal rates of exchange against Sterling
|
|
Half year ended 31 July 2023 |
Half year ended 31 July 2022 |
Year ended 31 January 2023 |
|||
|
|
Average rate |
Period end rate |
Average rate |
Period end rate |
Average rate |
Year end rate |
|
Euro |
1.15 |
1.17 |
1.18 |
1.19 |
1.17 |
1.13 |
|
US Dollar |
1.24 |
1.29 |
1.27 |
1.22 |
1.23 |
1.23 |
|
Polish Zloty |
5.25 |
5.14 |
5.53 |
5.64 |
5.48 |
5.34 |
|
Romanian Leu |
5.66 |
5.77 |
5.85 |
5.87 |
5.76 |
5.58 |
|
Turkish Lira* |
34.61 |
34.61 |
19.67 |
21.82 |
23.18 |
23.18 |
* The 31 July 2023 and 31 January 2023 Turkish Lira average exchange rates represent the closing rates for the periods, due to the application of hyperinflation accounting in Turkey.
Risks and uncertainties
The principal risks and uncertainties to which the Group is exposed are set out on pages 51-58 of the Kingfisher plc Annual Report and Accounts for the year ended 31 January 2023. These have been reviewed as part of the Group's half year procedures and are listed in the Financial Review.
Use of non-GAAP measures
In the reporting of financial information, the Group uses certain measures that are not required under IFRS, the generally accepted
accounting principles ('GAAP') under which the Group reports. The Group believes that retail profit, adjusted pre-tax profit, adjusted effective tax rate, and adjusted earnings per share provide additional useful information on performance and trends to shareholders. These and other non-GAAP measures (also known as 'Alternative Performance Measures'), such as net debt, are used by the Group for internal performance analysis and incentive compensation arrangements for employees. The terms 'retail profit', 'adjusting items', 'adjusted', 'adjusted effective tax rate', 'net cashflow' and 'net debt' are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measures.
Retail profit is defined as continuing operating profit before central costs, the Group's share of interest and tax of joint ventures and associates and adjusting items. Central costs principally comprise the costs of the Group's head office before adjusting items.
Adjusting items, which are presented separately within their relevant income statement category, include items which by virtue of their size and/or nature, do not reflect the Group's ongoing trading performance. Adjusting items may include, but are not limited to:
· non-trading items included in operating profit such as profits and losses on the disposal, closure, exit or impairment of subsidiaries, joint ventures, associates and investments which do not form part of the Group's ongoing trading activities;
· the costs of significant restructuring and incremental acquisition integration costs;
· profits and losses on the disposal/exit of properties, impairments of goodwill and significant impairments (or impairment reversals) of other non-current assets;
· prior year tax items (including the impact of changes in tax rates on deferred tax), significant one-off tax settlements and provision charges/releases and the tax effects of other adjusting items;
· financing fair value remeasurements i.e. changes in the fair value of financing derivatives, excluding interest accruals, offset by fair value adjustments to the carrying amount of borrowings and other hedged items under fair value (or non-designated) hedge relationships. Financing derivatives are those that relate to hedged items of a financing nature.
The term 'adjusted' refers to the relevant measure being reported for continuing operations excluding adjusting items.
The adjusted effective tax rate is calculated as continuing income tax expense excluding prior year tax items (including the impact of changes in tax rates on deferred tax), significant one-off tax settlements and provision charges/releases and the tax effects of other adjusting items, divided by continuing profit before taxation excluding adjusting items. Prior year tax items represent income statement tax relating to underlying items originally arising in prior years, including the impact of changes in tax rates on deferred tax. The exclusion of items relating to prior years, and those not in the ordinary course of business, helps provide an indication of the Group's ongoing rate of tax.
Net debt comprises lease liabilities, borrowings and financing derivatives (excluding accrued interest) less cash and cash equivalents and short-term deposits, including such balances classified as held for sale.
Refer to the Financial Review for definitions of all of the Group's Alternative Performance Measures, including further information on why they are used and details of where reconciliations to statutory measures can be found where applicable.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 January 2023, as described in note 2 of those financial statements, except where set out below. The critical accounting estimates and judgements are set out in note 3 of the annual financial statements for the year ended 31 January 2023 and remain unchanged.
Taxes on income for interim periods are accrued using the best estimate of the effective tax rate that would be applicable to expected total annual earnings.
4. Segmental analysis
Income statement
|
|
Half year ended 31 July 2023 |
||||||
|
|
|
|
|
|
|
|
|
|
£ millions |
UK & Ireland |
France |
Poland |
Other |
Other International |
Total |
|
|
Sales |
3,346 |
2,311 |
880 |
343 |
1,223 |
6,880 |
|
|
Retail profit/(loss) |
306 |
104 |
35 |
(12) |
23 |
433 |
|
|
Central costs |
|
|
|
|
|
(36) |
|
|
Share of interest and tax of joint ventures and associates |
|
|
|
|
|
(11) |
|
|
Adjusting items |
|
|
|
|
|
(19) |
|
|
Operating profit |
|
|
|
|
|
367 |
|
|
Net finance costs |
|
|
|
|
|
(50) |
|
|
Profit before taxation |
|
|
|
|
|
317 |
|
|
|
Half year ended 31 July 2022 |
||||||
|
|
|
|
|
|
|
|
|
|
£ millions |
UK & Ireland |
France |
Poland |
Other |
Other International |
Total |
|
|
Sales |
3,221 |
2,325 |
913 |
350 |
1,263 |
6,809 |
|
|
Retail profit/(loss) |
339 |
129 |
94 |
(7) |
87 |
555 |
|
|
Central costs |
|
|
|
|
|
(26) |
|
|
Adjusting items |
|
|
|
|
|
2 |
|
|
Operating profit |
|
|
|
|
|
531 |
|
|
Net finance costs |
|
|
|
|
|
(57) |
|
|
Profit before taxation |
|
|
|
|
|
474 |
|
|
|
Year ended 31 January 2023 |
||||||
|
|
|
|
|
|
|
|
|
|
£ millions |
UK & Ireland |
France |
Poland |
Other |
Other International |
Total |
|
|
Sales |
6,200 |
4,452 |
1,734 |
673 |
2,407 |
13,059 |
|
|
Retail profit/(loss) |
603 |
195 |
148 |
(23) |
125 |
923 |
|
|
Central costs |
|
|
|
|
|
(49) |
|
|
Share of interest and tax of joint ventures and associates |
|
|
|
|
|
(4) |
|
|
Adjusting items |
|
|
|
|
|
(147) |
|
|
Operating profit |
|
|
|
|
|
723 |
|
|
Net finance costs |
|
|
|
|
|
(112) |
|
|
Profit before taxation |
|
|
|
|
|
611 |
|
Balance sheet
|
|
At 31 July 2023 |
||||||
|
|
|
|
|
|
|
|
|
|
£ millions |
UK & Ireland |
France |
Poland |
Other |
Other International |
Total |
|
|
Segment assets |
2,974 |
1,784 |
1,186 |
352 |
1,538 |
6,296 |
|
|
Central assets |
|
|
|
|
|
66 |
|
|
Goodwill |
|
|
|
|
|
2,407 |
|
|
Net debt |
|
|
|
|
|
(2,181) |
|
|
Net assets |
|
|
|
|
|
6,588 |
|
|
|
At 31 July 2022 |
||||||
|
|
|
|
|
|
|
|
|
|
£ millions |
UK & Ireland |
France |
Poland |
Other |
Other International |
Total |
|
|
Segment assets |
3,198 |
1,753 |
988 |
301 |
1,289 |
6,240 |
|
|
Central liabilities |
|
|
|
|
|
(45) |
|
|
Goodwill |
|
|
|
|
|
2,424 |
|
|
Net debt |
|
|
|
|
|
(1,848) |
|
|
Net assets |
|
|
|
|
|
6,771 |
|
|
|
At 31 January 2023 |
||||||
|
|
|
|
|
|
|
|
|
|
£ millions |
UK & Ireland |
France |
Poland |
Other |
Other International |
Total |
|
|
Segment assets |
3,084 |
1,914 |
1,106 |
366 |
1,472 |
6,470 |
|
|
Central assets |
|
|
|
|
|
59 |
|
|
Goodwill |
|
|
|
|
|
2,408 |
|
|
Net debt |
|
|
|
|
|
(2,274) |
|
|
Net assets |
|
|
|
|
|
6,663 |
|
The operating segments disclosed above are based on the information reported internally to the Board of Directors and Group Executive, representing the geographical areas in which the Group operates. The Group only has one reportable business segment, being the supply of home improvement products and services. The majority of the sales in each geographical area are derived from in-store and online sales of products.
The 'Other International' segment consists of Poland, Iberia, Romania, the joint venture Koçtaş in Turkey, NeedHelp, Screwfix International and results from franchise agreements. Poland has been shown separately due to its significance.
Central costs principally comprise the costs of the Group's head office. Central assets and liabilities comprise unallocated head office and other central items including pensions, insurance, interest and tax.
The Group's sales, although generally not highly seasonal on a half yearly basis, do increase over the Easter period and during the summer months leading to slightly higher sales usually being recognised in the first half of the year. However, due to the continued uncertainty around the current macro-economic environment, the phasing of sales is less predictable.
5. Adjusting items
|
|
|
|
|
|
£ millions |
Half year ended 31 July 2023 |
Half year ended 31 July 2022 |
Year ended 31 January 2023 |
|
Included within selling and distribution expenses |
|
|
|
|
Net store asset impairment losses |
(14) |
- |
(139) |
|
Operating model restructuring |
(7) |
- |
- |
|
Release of France and other restructuring provisions |
- |
1 |
3 |
|
|
(21) |
1 |
(136) |
|
Included within administrative expenses |
|
|
|
|
Romania goodwill impairment |
- |
- |
(16) |
|
Release of Castorama Russia disposal warranty liability |
- |
- |
4 |
|
|
- |
- |
(12) |
|
Included within other income |
|
|
|
|
Profit on disposal of Crealfi associate investment |
2 |
- |
- |
|
Profit on exit of properties |
- |
1 |
1 |
|
|
2 |
1 |
1 |
|
Adjusting items before tax |
(19) |
2 |
(147) |
|
Prior year and other adjusting tax items |
7 |
3 |
29 |
|
Adjusting items |
(12) |
5 |
(118) |
In consideration of H1 2023/24 performance to date, we have revised future projections for a number of stores across the Group's portfolio. This has resulted in the recognition of £14m of net store impairment charges in the period. These charges have been recorded principally in France, Poland and Romania.
During the period, the Group commenced formal consultation with employee representatives regarding a proposed Group Technology operating model restructuring programme. Operating model restructuring costs of £7m have been recorded in the period, primarily related to this programme. The total cost is expected to be c.£15m by FY 2024/25.
On 30 June 2023, the Group completed the disposal of its 49% interest in its French associate investment Crealfi S.A., for cash proceeds of £9m, resulting in a gain on disposal of £2m.
Prior year and other adjusting tax items relate principally to deferred tax credits recorded in respect of the impairment and restructuring expenses noted above, movements in prior year provisions to reflect a reassessment of expected outcomes, and refunds from tax authorities.
Refer to note 5 of the 2022/23 interim accounts for further details on adjusting items for the half year ended 31 July 2022, and to note 6 of the 2022/23 annual accounts for further details on adjusting items for the year ended 31 January 2023.
6. Net finance costs
|
£ millions |
Half year ended 31 July 2023 |
Half year ended 31 July 2022 |
Year ended 31 January 2023 |
|
|
Bank overdrafts, bank loans and derivatives |
- |
(3) |
(3) |
|
|
Fixed term debt |
(2) |
- |
(2) |
|
|
Lease liabilities |
(62) |
(62) |
(124) |
|
|
Finance costs |
(64) |
(65) |
(129) |
|
|
|
|
|
|
|
|
Cash and cash equivalents and short-term deposits |
7 |
1 |
5 |
|
|
Net interest income on defined benefit pension schemes |
4 |
6 |
11 |
|
|
Other interest income |
3 |
- |
- |
|
|
Finance lease income |
- |
1 |
1 |
|
|
Finance income |
14 |
8 |
17 |
|
|
|
|
|
|
|
|
Net finance costs |
(50) |
(57) |
(112) |
|
7. Income tax expense
|
£ millions |
Half year ended |
Half year ended 31 July 2022 |
Year ended |
|
UK corporation tax |
|
|
|
|
Current tax on profits for the period |
(46) |
(29) |
(44) |
|
Adjustments in respect of prior years |
1 |
- |
3 |
|
|
(45) |
(29) |
(41) |
|
Overseas tax |
|
|
|
|
Current tax on profits for the period |
(24) |
(49) |
(77) |
|
Adjustments in respect of prior years |
2 |
- |
4 |
|
|
(22) |
(49) |
(73) |
|
Deferred tax |
|
|
|
|
Current period |
(13) |
(26) |
(25) |
|
Adjustments in respect of prior years |
- |
1 |
(3) |
|
Adjustments in respect of changes in tax rates |
- |
2 |
2 |
|
|
(13) |
(23) |
(26) |
|
|
|
|
|
|
Income tax expense |
(80) |
(101) |
(140) |
The adjusted effective tax rate on profit before adjusting items is 26% (2022/23: 22%), representing the best estimate of the effective rate for the full financial year. The adjusted effective tax rate on the same basis for the year ended 31 January 2023 was 22%. The adjusted effective tax rate calculation is set out in the Financial Review in part 1 of this announcement.
8. Earnings per share
|
Pence |
Half year ended 31 July 2023 |
Half year ended 31 July 2022 |
Year ended 31 January 2023 |
|
Basic earnings per share |
12.4 |
18.6 |
23.8 |
|
Effect of dilutive share options |
(0.2) |
(0.3) |
(0.3) |
|
Diluted earnings per share |
12.2 |
18.3 |
23.5 |
|
|
|
|
|
|
Basic earnings per share |
12.4 |
18.6 |
23.8 |
|
Adjusting items before tax |
1.0 |
(0.1) |
7.4 |
|
Prior year and other adjusting tax items |
(0.4) |
(0.2) |
(1.5) |
|
Adjusted basic earnings per share |
13.0 |
18.3 |
29.7 |
|
|
|
|
|
|
Diluted earnings per share |
12.2 |
18.3 |
23.5 |
|
Adjusting items before tax |
1.0 |
(0.1) |
7.3 |
|
Prior year and other adjusting tax items |
(0.4) |
(0.2) |
(1.4) |
|
Adjusted diluted earnings per share |
12.8 |
18.0 |
29.4 |
|
|
|
|
|
The calculation of basic and diluted earnings per share is based on the profit for the period attributable to equity shareholders of the Company. A reconciliation of statutory earnings to adjusted earnings is set out below:
|
|
|
|
|
||
|
£ millions |
Half year ended 31 July 2023 |
Half year ended 31 July 2022 |
Year ended 31 January 2023 |
||
|
Earnings |
237 |
373 |
471 |
||
|
Adjusting items before tax |
19 |
(2) |
147 |
||
|
Prior year and other adjusting tax items |
(7) |
(3) |
(29) |
||
|
Adjusted earnings |
249 |
368 |
589 |
||
|
|
|
|
|
||
The weighted average number of shares in issue during the period, excluding those held in the Employee Share Ownership Plan Trust ('ESOP trust'), is set out below:
|
|
|
|
|
||
|
Weighted average number of shares (millions) |
Half year ended 31 July 2023 |
Half year ended 31 July 2022 |
Year ended 31 January 2023 |
||
|
Basic |
1,918 |
2,012 |
1,980 |
||
|
Diluted |
1,943 |
2,035 |
2,002 |
||
|
|
|
|
|
||
9. Dividends
|
|
Half year ended |
Half year ended |
Year ended |
|
£ millions |
31 July 2023 |
31 July 2022 |
31 January 2023 |
|
Dividends to equity shareholders of the Company |
|
|
|
|
Ordinary final dividend for the year ended 31 January 2023 of 8.60p per share |
165 |
- |
- |
|
Ordinary interim dividend for the year ended 31 January 2023 of 3.80p per share |
- |
- |
74 |
|
Ordinary final dividend for the year ended 31 January 2022 of 8.60p per share |
- |
172 |
172 |
|
|
165 |
172 |
246 |
The proposed interim ordinary dividend for the period ended 31 July 2023 is 3.80p per share (2022/23: 3.80p per share).
10. Property, plant and equipment, investment property and other intangible assets
Additions to the cost of property, plant and equipment, investment property and other intangible assets are £152m (2022/23: £174m) and for the year ended 31 January 2023 were £452m. Disposals in net book value of property, plant and equipment, investment property, property assets held for sale and other intangible assets are £nil (2022/23: £1m) and for the year ended 31 January 2023 were £2m.
Capital commitments contracted but not provided for at the end of the period are £50m (2022/23: £55m) and at 31 January 2023 were £19m.
11. Post-employment benefits
|
|
Half year ended |
Half year ended |
Year ended |
|
£ millions |
31 July 2023 |
31 July 2022 |
31 January 2023 |
|
Net surplus in schemes at beginning of period |
137 |
410 |
410 |
|
Current service cost |
(7) |
(6) |
(13) |
|
Administration costs |
(2) |
(2) |
(4) |
|
Net interest income |
4 |
6 |
11 |
|
Net remeasurement losses |
(9) |
(14) |
(278) |
|
Contributions paid by employer |
- |
13 |
18 |
|
Exchange differences |
4 |
(1) |
(7) |
|
Net surplus in schemes at end of period |
127 |
406 |
137 |
|
UK |
243 |
542 |
251 |
|
Overseas |
(116) |
(136) |
(114) |
|
Net surplus in schemes at end of period |
127 |
406 |
137 |
|
Present value of defined benefit obligations |
(1,916) |
(2,408) |
(2,113) |
|
Fair value of scheme assets |
2,043 |
2,814 |
2,250 |
|
Net surplus in schemes at end of period |
127 |
406 |
137 |
The assumptions used in calculating the costs and obligations of the Group's defined benefit pension schemes are set by the Directors after consultation with independent professionally qualified actuaries. The assumptions are based on the conditions at the time and changes in these assumptions can lead to significant movements in the estimated obligations, as illustrated in the sensitivity analysis provided in note 28 of the annual financial statements for the year ended 31 January 2023.
A full actuarial valuation of the scheme is carried out every three years by an independent actuary for the Trustee and the last full valuation was carried out as at 31 March 2022. Following this valuation and in accordance with the scheme's Statement of Funding Principles, The Trustee and Kingfisher agreed to cease annual employer contributions during the period from August 2022 to July 2025. This agreement was reached with reference to a funding objective that targets a longer-term, low risk funding position in excess of the minimum statutory funding requirements. This longer-term objective is based on the principles of the scheme reaching a point where it can provide benefits to members with a high level of security, thereby limiting its reliance on the employer for future support. The Company monitors the scheme funding level on a regular basis and will reassess with the scheme Trustee the appropriate level of contributions at future valuations.
A key assumption in valuing the pension obligation is the discount rate. Accounting standards require this to be set based on market yields on high-quality corporate bonds at the balance sheet date. The UK scheme discount rate is derived using a single equivalent discount rate approach, based on the yields available on a portfolio of high-quality Sterling corporate bonds with the same duration as that of the scheme liabilities.
The principal financial assumptions for the UK scheme, being the Group's principal defined benefit scheme, are set out below:
|
|
At |
At |
At |
|
Annual % rate |
31 July 2023 |
31 July 2022 |
31 January 2023 |
|
Discount rate |
5.15 |
3.40 |
4.50 |
|
Rate of pension increases |
3.05 |
3.20 |
3.15 |
12. Financial instruments
The Group holds the following derivative financial instruments at fair value:
|
|
At |
At |
At |
|
|
|
£ millions |
31 July 2023 |
31 July 2022 |
31 January 2023 |
|
|
|
Foreign exchange contracts |
4 |
84 |
16 |
|
|
|
Derivative assets |
4 |
84 |
16 |
|
|
|
|
At |
At |
At |
|
|
|
£ millions |
31 July 2023 |
31 July 2022 |
31 January 2023 |
|
|
|
Foreign exchange contracts |
(57) |
(13) |
(52) |
|
|
|
Derivative liabilities |
(57) |
(13) |
(52) |
|
|
The fair values are calculated by discounting future cash flows arising from the instruments and adjusted for credit risk. These fair value measurements are all made using observable market rates of interest, foreign exchange and credit risk. All the derivatives held by the Group at fair value are considered to have fair values determined by level 2 inputs as defined by the fair value hierarchy of IFRS 13, 'Fair value measurement', representing significant observable inputs other than quoted prices in active markets for identical assets or liabilities. There are no non-recurring fair value measurements nor have there been any transfers of assets or liabilities between levels of the fair value hierarchy.
Except as detailed in the following table of borrowings, the carrying amounts of financial instruments (excluding lease liabilities) recorded at amortised cost in the financial statements are approximately equal to their fair values. Where available, market values have been used to determine the fair values of borrowings. Where market values are not available or are not reliable, fair values have been calculated by discounting cash flows at prevailing interest and foreign exchange rates. This has resulted in level 2 inputs for borrowings as defined by the IFRS 13 fair value hierarchy.
|
|
|
|
Carrying amount |
|
|
|
£ millions |
At 31 July 2023 |
At 31 July 2022 |
At 31 January 2023 |
|
|
|
Bank overdrafts |
27 |
17 |
16 |
|
|
|
Bank loans |
3 |
1 |
3 |
|
|
|
Fixed term debt |
99 |
- |
99 |
|
|
|
Borrowings |
129 |
18 |
118 |
|
|
|
|
|
|
Fair value |
|
|
|
£ millions |
At 31 July 2023 |
At 31 July 2022 |
At 31 January 2023 |
|
|
|
Bank overdrafts |
27 |
17 |
16 |
|
|
|
Bank loans |
4 |
1 |
3 |
|
|
|
Fixed term debt |
107 |
- |
102 |
|
|
|
Borrowings |
138 |
18 |
121 |
|
|
Cash and borrowings balances at 31 July 2023, 31 July 2022 and 31 January 2023 reflect the grossing up of cash and overdraft balances subject to the Group's cash pooling arrangements to ensure the Group's presentation of these balances is in line with the requirements for offsetting in accordance with IAS 32.
Fixed term debt comprises a £50m term loan maturing in December 2024 and a £50m term loan maturing in January 2025.
As at 31 July 2023, the Group had an undrawn revolving credit facility (RCF) of £550m, of which £504m is due to expire in May 2026 and £46m in May 2025 (2022/23: £550m RCF due to expire in May 2025). As at 31 January 2023, the Group had an undrawn RCF of £550m due to expire in May 2025.
13. Share capital
|
|
Number of ordinary shares |
Ordinary share capital |
|
|
millions |
£ millions |
|
Allotted, called up and fully paid: |
|
|
|
At 1 February 2023 |
1,940 |
305 |
|
New shares issued under share schemes |
2 |
- |
|
Purchase of own shares for cancellation |
(41) |
(6) |
|
At 31 July 2023 |
1,901 |
299 |
|
|
|
|
|
At 1 February 2022 |
2,066 |
325 |
|
New shares issued under share schemes |
1 |
- |
|
Purchase of own shares for cancellation |
(82) |
(13) |
|
At 31 July 2022 |
1,985 |
312 |
|
|
|
|
|
At 1 February 2022 |
2,066 |
325 |
|
New shares issued under share schemes |
5 |
1 |
|
Purchase of own shares for cancellation |
(131) |
(21) |
|
At 31 January 2023 |
1,940 |
305 |
Ordinary shares have a par value of 155/7 pence per share and carry full voting, dividend and capital distribution rights.
During the period the Group purchased 41 million of the Company's own shares for cancellation at a cost of £99m as part of its capital returns programme.
14. Other reserves
|
|
Half year ended 31 July 2023 |
|||||
|
£ millions |
Translation reserve |
Cash flow hedge reserve |
Other |
Total |
||
|
At 1 February 2023 |
150 |
(24) |
159 |
285 |
||
|
Inventory cash flow hedges - fair value losses |
- |
(40) |
- |
(40) |
||
|
Tax on items that will not be reclassified subsequently to profit or loss |
- |
9 |
- |
9 |
||
|
Currency translation differences Group |
|
- |
- |
(10) |
||
|
(10) |
||||||
|
Joint ventures and associates |
(4) |
- |
- |
(4) |
||
|
Transferred to income statement |
(2) |
- |
- |
(2) |
||
|
Inventory cash flow hedges - losses transferred to income statement |
- |
9 |
- |
9 |
||
|
Other comprehensive expense for the period |
(16) |
(22) |
- |
(38) |
||
|
Inventory cash flow hedges - losses transferred to inventories |
- |
12 |
- |
12 |
||
|
Tax on equity items |
- |
(4) |
- |
(4) |
||
|
At 31 July 2023 |
134 |
(38) |
159 |
255 |
||
|
|
|
|
|
|
||
|
|
|
|||||
|
|
Half year ended 31 July 2022 |
|||||
|
£ millions |
Translation reserve |
Cash flow hedge reserve |
Other |
Total |
||
|
At 1 February 2022 |
10 |
27 |
159 |
196 |
||
|
Inventory cash flow hedges - fair value gains |
- |
113 |
- |
113 |
||
|
Tax on items that will not be reclassified subsequently to profit or loss |
- |
(28) |
- |
(28) |
||
|
Currency translation differences Group |
(22) |
- |
- |
(22) |
||
|
Joint ventures and associates |
(1) |
- |
- |
(1) |
||
|
Other comprehensive (expense)/income for the period |
(23) |
85 |
- |
62 |
||
|
Inventory cash flow hedges - gains transferred to inventories |
- |
(61) |
- |
(61) |
||
|
Tax on equity items |
(1) |
15 |
- |
14 |
||
|
At 31 July 2022 |
(14) |
66 |
159 |
211 |
||
|
|
|
|||||
|
|
|
|||||
|
|
Year ended 31 January 2023 |
|||||
|
£ millions |
Translation reserve |
Cash flow hedge reserve |
Other |
Total |
||
|
At 1 February 2022 |
10 |
27 |
159 |
196 |
||
|
Inventory cash flow hedges - fair value gains |
- |
58 |
- |
58 |
||
|
Tax on items that will not be reclassified subsequently to profit or loss |
- |
(12) |
- |
(12) |
||
|
Currency translation differences Group |
129 |
- |
- |
129 |
||
|
Joint ventures and associates |
11 |
- |
- |
11 |
||
|
Inventory cash flow hedges - gains transferred to income statement |
- |
(5) |
- |
(5) |
||
|
Other comprehensive income for the year |
140 |
41 |
- |
181 |
||
|
Inventory cash flow hedges - gains transferred to inventories |
- |
(117) |
- |
(117) |
||
|
Tax on equity items |
- |
25 |
- |
25 |
||
|
At 31 January 2023 |
150 |
(24) |
159 |
285 |
||
15. Cash generated by operations
|
£ millions |
Half year ended |
Half year ended |
Year ended 31 January 2023 |
|
Operating profit |
367 |
531 |
723 |
|
Share of post-tax results of joint ventures and associates |
5 |
(5) |
(5) |
|
Depreciation and amortisation |
315 |
282 |
582 |
|
Net impairment charges |
14 |
- |
155 |
|
Gain on disposal of investments in associates |
(2) |
- |
- |
|
Lease gains |
(1) |
(2) |
(2) |
|
Share-based compensation charge |
12 |
11 |
19 |
|
Increase in inventories |
(89) |
(395) |
(234) |
|
Increase in trade and other receivables |
(53) |
(59) |
(44) |
|
Increase/(decrease) in trade and other payables |
219 |
231 |
(196) |
|
Movement in provisions |
- |
(5) |
(13) |
|
Movement in post-employment benefits |
9 |
(5) |
(1) |
|
Cash generated by operations |
796 |
584 |
984 |
16. Net debt
|
£ millions |
At 31 July 2023 |
At 31 July 2022 |
At 31 January 2023 |
|
|
Cash and cash equivalents |
344 |
496 |
286 |
|
|
Bank overdrafts |
(27) |
(17) |
(16) |
|
|
Cash and cash equivalents and bank overdrafts |
317 |
479 |
270 |
|
|
Bank loans |
(3) |
(1) |
(3) |
|
|
Fixed term debt |
(99) |
- |
(99) |
|
|
Lease liabilities |
(2,398) |
(2,318) |
(2,444) |
|
|
Net financing derivatives |
2 |
(8) |
2 |
|
|
Net debt |
(2,181) |
(1,848) |
(2,274) |
|
|
|
|
|
|
|
|
£ millions |
Half year ended 31 July 2023 |
Half year ended 31 July 2022 |
Year ended 31 January 2023 |
|
|
Net debt at beginning of period |
(2,274) |
(1,572) |
(1,572) |
|
|
Net increase/(decrease) in cash and cash equivalents and bank overdrafts |
51 |
(329) |
(555) |
|
|
Issue of fixed term debt |
- |
- |
(99) |
|
|
Net cash flow |
51 |
(329) |
(654) |
|
|
Movements in lease liabilities |
40 |
57 |
(41) |
|
|
Exchange differences and other non-cash movements |
2 |
(4) |
(7) |
|
|
Net debt at end of period |
(2,181) |
(1,848) |
(2,274) |
|
17. Contingent liabilities
The Group is subject to claims and litigation arising in the ordinary course of business and provision is made where liabilities are considered likely to arise on the basis of current information and legal advice.
The Group files tax returns in many jurisdictions around the world and at any one time is subject to periodic tax audits in the ordinary course of its business. Applicable tax laws and regulations are subject to differing interpretations and the resolution of a final tax position can take several years to complete. Where it is considered that future tax liabilities are more likely than not to arise, an appropriate provision is recognised in the financial statements.
In October 2017, the European Commission opened a state aid investigation into the Group Financing Exemption section of the UK controlled foreign company rules. While the Group has complied with the requirements of UK tax law in force at the time, in April 2019 the European Commission concluded that aspects of the UK controlled foreign company regime partially constitute illegal state aid. In January 2021, the Group received a charging notice from HM Revenue & Customs for £57m, which was paid in February 2021, with a further £7m interest paid in April 2021.
The UK Government and the Group, along with other UK-based multinational groups, appealed the European Commission decision to the European Courts. On 8 June 2022, the General Court of the European Union dismissed several of those appeals, including the UK Government's. The decision of the General Court has been appealed to the European Court of Justice.
The final impact on the Group remains uncertain but, based upon advice taken, the Group continues to consider that the amount paid of £64m plus accrued interest of £3m, which is included in non-current assets, will ultimately be recovered.
Whilst the procedures that must be followed to resolve these types of tax issues make it likely that it will be some years before the eventual outcome is known, the Group does not currently expect the outcome of these contingent liabilities to have a material effect on the Group's financial position.
18. Related party transactions
The Group's significant related parties are its joint venture, associate and pension schemes as disclosed in note 36 of the annual financial statements for the year ended 31 January 2023. During the period, the Group completed the disposal of its 49% interest in its French associate investment Crealfi S.A. There have been no other significant changes in related parties or related party transactions in the period.
19. Post balance sheet events
During the period since the balance sheet date, the Group purchased 4 million of the Company's own shares for cancellation at a cost of £10m. This amount was deducted from equity in the half year to 31 July 2023 as a result of an irrevocable buyback agreement which was in place at 31 July 2023.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that the condensed interim financial statements have been prepared in accordance with United Kingdom adopted International Accounting Standard 34, "Interim Financial Reporting", and that the Interim Results includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the period and their impact on the interim condensed financial statements, and a description of the principal risks and uncertainties for the remainder of the financial year; and
· material related party transactions in the period and any material changes in the related party transactions described in the last annual report.
The Directors of Kingfisher plc were listed in the Group's 2022/23 Annual Report and Accounts. A list of current Directors is maintained on the Kingfisher plc website which can be found at www.kingfisher.com.
By order of the Board
Thierry Garnier Bernard Bot
Chief Executive Officer Chief Financial Officer
18 September 2023 18 September 2023
INDEPENDENT REVIEW REPORT TO KINGFISHER PLC
Conclusion
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 July 2023 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 19.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 July 2023 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with United Kingdom adopted international accounting standards and International Financial Reporting Standards as issued by the IASB. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410; however future events or conditions may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for expressing to the company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our Conclusion, including our Conclusion Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
18 September 2023
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